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Thane Gustafson Education. (2013) 'Wheel of Fortune The Battle for Oil and Power In Russia.'

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  CSPAN    Book TV    Thane Gustafson  Education.  (2013) 'Wheel of  
   Fortune The Battle for Oil and Power In Russia.'  

    January 13, 2013
    2:00 - 3:00pm EST  

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>> well, i thought i would begin by telling you a few stories about what the book is about and skipping the big structure and simply tell you some stories about some of the people who are in this book. because in the end, it's very much about real peep -- people. so what kind of book is this? it's big, it's heavy -- [laughter] it's, you know, you may open it
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with a certain trepidation. but what it is, the a memoir, first of all -- is a memoir, first of all. it's a little bit of a memoir of my travels in russia. we've gone through 20 years together, so it's a memoir of the last 20 years since the soviet union fell apart. it's a history of the oil industry, but it's also a history of russia these past 20 years, the initial collapse in the 1990s and then the gradual recovery the decade after. so we end up with the russia that we see today after this long cycle, the russian oil industry has gone through the same cycle. it's a biography, it's a multiple biography of o number of -- a number of people, but in particular of the clan that emerged in the 1990s in the city of st. peat user berg --
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petersburg and came to moscow in the year 2000, and you could sum up the last 20 years of russian history by saying this is the revenge of st. petersburg over moscow as the clans from st. petersburg take over and are very largely without much exaggeration are in command. this is very much a st. petersburg crowd. so it's a history of the e emergence of that crowd, and this is the latest chapter in the 300-year rivalry between the two capitals. so it's a tale of two cities. it's a murder mystery, but i can't give you the names of the guilty ones in every case. but you can draw your own conclusions. there are some marvelous unsolved mysteries that may be unraveled someday and most never will. it used to be said that in
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russia in the 1990s you could tell if a business was profitable by the bodies that led to the front door. if there were no bodies, it wasn't worth paying attention to because it couldn't possibly be profitable. i'll leave it to your imagination why, for example, the international red cross was highly profitable by that measure in the 1990s in russia. one clue is the subsidies that you could get for the import of tax-free tobacco and alcohol to benefit goods causes such as the red cross. this was profitable and, therefore, of interest. it's even a science fiction story, because what we're doing here really when you come right down to it is the meeting of two alien civilizations after 70 years of the soviet period. the oil industry, in particular, grew up in almost complete isolation from the waste, and this is virtually a unique
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place. we have other places where oil industries are run by national oil companies, but in almost every case -- in fact, in every case, these industries were first founded by foreigners and then were taken over. not so in the case of russia where from the 1920s on at any rate for all practical purposes the oil industry was home grown and developed its own culture, its own civilization even as the soviet union did with its own language and its own culture. i sometimes like to tell my classes that the story of russia in the 20th century is very much that of a people that decided that capitalism didn't work, so it's as though they all piled into a space capsule and took off and landed on the planet mars and started a completely different civilization in which the market was thrown out and prices and profits and private ownership and built that civilization and actually made it run for nearly six, seven
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decades. not well, but it ran. and then they decided it wasn't working particularly well, so aall climbed back into their space capsule and came back to earth. which is something remarkable. this is something russians do every so often. they will conduct these massive social science experiments on themselves. this isn't the first time they've done it. so here they are back on earth again, and the oil industry suddenly faced the world oil industry. and so the book is very much how these two civilizations have come to terms with one another, which has not been easy because these past 20 years have been a time of revolution in the global oil industry. and so suddenly you land on earth, and you suddenly find yourself at least in the oil industry faced with a race the question is how have the
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russians done in that race? talented engineering culture that they are? that's part of the story. the book is, has tragic heroes and tragic anti-heroes, one of whom is in jail. and i wanted to avoid making in the story of him and yet in the end this man who was briefly the richest man in russia who ran the most successful private oil company in russia at the time of his arrest in 2003, this man has been in jail now for ten years. he'll have been in jail for ten years, and this very much is the result of a blood match with his nemesis, vladimir putin. and, of course, one of the big questions is when will he get
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out. no one knows. but the other question is, what exactly did he do? and there has been a great deal of coverage, and i didn't want to add to that whole literature. but what i have tried to do is to go into his company. and i've had interviews with a number of players in that company to try to find out what was unique about that company that he built, what was unique that enabled it to double oil production within four short years? how was that done? so you'll find there's a chapter on that side of the story. and then lastly, i have to say that this is a story of guilty love. [laughter] which i'll come back to if you ask me. so what's the book really about? all right. let me give you the main points here, and i'll keep this brief because the basic structure, the skeleton of the book is
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something that's quickly told, and it's basically an analysis that culminates in a prediction. this industry which is now at this moment the world's large oil producer because the saudis have throttled back, the saudis and the russians played tag with one another -- they alternate as to who's the world's largest oil producer. the russians at this moment are ahead. they have moved up very slightly to very nearly the soviet level of production. meanwhile, the saudis have throttled back in order to moderate the -- well, why are they, as a matter of fact? why are they throttling? we can come back to that. so anyway, you have the russians who are the number one oil producers, but they have essentially been coasting on the assets inherited from the soviet union, from another time and another place.
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and such was the wealth of what was discovered, such was the wealth of what's till producing -- still producing 60% of russia's oil production comes from fields that were already in production at the time of the collapse of the soviet union. virtually all of russian oil today comes from fields that were already known in soviet times. there have been very few new discoveries that are producing today. the drama of the situation is that the inheritance is now starting to run down, and the place to look is west siberia which has been the producing core of the soviet oil industry since the 1960s. it's been the locomotive of this industry for half a century, and it is now in decline. now, that doesn't mean that the russians are running out of oil. there are phenomenal reserves
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and, of course, i'm not even talking about natural gas which is a whole different story. the future of russia will be natural gas, not oil. but let's stick with oil for the moment. there is plenty of oil left. but as you move out of that inherited comfort zone, you move to areas that are deeper, that are colder, that are sourer, that are more complex, that are more distant, that are offshore. in a word, you move to oil that is more costly if only because now you have to invest in it instead of just inheriting it. now, the result of that is that it's going to be less profitable. now, the reason that that matters is that the oil industry has a very important customer, and that's the russian state. and the russian state for the past two decades and, indeed,
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going back to soviet times, but particularly in the past 20 years the russian state has become extremely dependent on the revenues from oil and, indeed, the rents, the pure rents from the soviet legacy these past 20 years. to a greater extent than the soviet state ever depended on oil. and that dependence is growing. and you can show that on the graphs, you can show that on slides i occasionally use in presentations, you can show that percentage of the russian budget that comes from oil and gas revenues, and it is going up and up and up, and in round numbers in 2012 it passed the 52% mark, that's oil and gas revenues together, but it's very largely oil. and to put that in perspective, you have to add that the russian budge itself is growing very
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rapidly to support the, first of all, some of the same obligations that we find ourselves increasingly supporting; namely, an aging population, a pension system and the like. but in addition to that, the budget has to support the growing ambitions of the putin leadership to increase funding for defense, funding for infrastructure for the renewal of industry and, indeed, shall we say for the support of the many clans that provide the basis of support for the regime. this sets the stage, these two things, these two trends, the increasing dependence of the russian state on oil and gas revenues to feed an expanding budget and the impending increase in costs and declining profits from oil and gas, the this sets up if you visualize it in your minds two contrary curves that are going to
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intersect. somewhere. and result in crisis. the russian oil industry in its next generation is simply not going to be able to support the growing level of expenditure that is big to -- that is basic to the russian state system that we see today. and can that's the core argument of the book. the russian state can't help itself. it is, effectively, addicted. but the russian oil industry can't help itself, because it has, in effect, had 20 years without having had to compete, to innovate. it is not ready at this moment to compete in the same way that the world oil industry is now competing for new sources of oil, for new technology and, indeed, is causing a new
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revolution in oil around the world. the russian oil industry is not yet ready to do this. it will be, the question is how fast. it will be, the question is what incentives will the russian state provide. at what point will this intersection take place. so i'll stop there. that is the core of the book, and why don't we open the floor for questions and answers and take the discussion wherever it goes. oh, good, there's another microphone. that's great. good. >> i'm sitting near the microphone, so i'll take the -- i'll grab my chance here while i can and be first in line. your last, the last idea that
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you just presented us with is sort of the central idea that, um, that the regime now faces the problem of coming up with the technology and the wherewithal to expand to, um, to invest in the industry and develop the industry more than they have in the recent past. is the, is there -- do they have -- i mean, i think of o russia as being fairly technologically competent. do you see any great dependence that they're likely to have for any number of years in developing their own technological capability, either the educational foundation of it or just any other aspects of oil and gas technology and so forth that they can't produce, come up with on their own reasonably,
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reasonably inexpensively or at least in comparison to what they'd have to sort of come up with if they have to deal with the rest of the world? and in particular, of course, whether they'll be forced to look to the u.s. or to the sort of traditional western opposition for that? >> well, thank you for that question. that is, indeed, the central question. that is the question that needs to be raised next. let me say first of all to put things in the perspective that when i say that the russian oil industry is not ready and i'm going to take a few minutes to answer this question, so i hope i won't keep you standing too long, we're talking about extremely clever people. and we're talking about people who are not standing still. so the right way to think of it is moving fronts.
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the world oil industry has been moving so fast that what we're talking about is a russian industry that although it has been moving forward, has not been moving forward at the same rate, at the same pace. and so there is that gap and, indeed, perhaps a widening gap. now, in some, in some instances that gap is quickly overcome. and let me give you an example. the famous fracking that we're hearing so much about. the russians, first of all, will tell you that they invented fracking. okay. so i've looked into this quite a bit, it turns out that it's not quite true. the first fracks were done in the united states in the gas industry i believe in missouri in 1947 if i remember correctly. and fracking, by the way, has
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been used in the gas industry on a massive scale ever since. it's been going on beneath our notice all along. the people who brought it back, however, were the canadians who brought it to russia in 988 -- 1988. and fracking started to be applied on a massive scale starting in about 1998. now, the point of the story is this: even though it was new to the russians, practically speaking, in 1998, by 2000, 2001 it had become a russian business, and there were russian companies and russian crews who were doing fracking at the, you know, on a massive scale. so this gives you one measure. at the opposite extreme, however, are techniques that are
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completely new to the russians and that require a whole different order of capability because they are so much more difficult. and the prime example is offshore. there are two examples in the world of countries that have gone 0-60 in developing arctic offshore. norway and now brazil. those two are really the touchstones. they are the benchmarks. and what those two examples tell you is that it takes about 20 years. if you do it right and you develop your own home-grown industries for arctic offshore and you go off and you start doing it and you take your licks and you make your mistakes but you start logging your achievements, it takes you 20 years from 0 to the forefront. where the russians are at this moment is effectively zero. again, because they didn't have to. they had no need to go off on to
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the arctic offshore. and so the starting gun is now. and it'll be very interesting to see whether they do as well as the norwegians and the brazilians in developing from scratch a home-grown industry at the top of the world. now, you asked a question about the role of the western companies in this. they have enlisted the western companies, as the norwegians did, as the brazilians did, and so we are seeing, in effect, the beginning of a fascinating chapter two in which the question of the hour and the question of the decade, question of the next two decades is going to be how well can the russians work in partnership and learn what they need to learn from the likes of exxonmobil and bp. and so that's, that's what's at stake right now.
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>> hi, thane. >> thanks, how nice to see you. >> nice to see you. you said in part this book is about guilty love and that if we asked you, you would tell us about that. [laughter] so i'd like you to tell us about that. [laughter] >> well, true confessions, lee, the guilty love is mine. and although it is unfashionable to confess love for the oil industry, i must say that in the process of researching and writing this book and living this book i have become captivated by the extraordinary ambition of a wager that the oil industry makes every day which is the incredible bet against nature that consists of walking
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up to what to all appearances looks like an empty, barren piece of real estate and figuring out that anywhere between a thousand and 5,000 feet down there is rock. by the way, i don't know if you've ever actually seen the rocks that oil comes from. it's amazing. you would, you would walk by on the street and never look twice. it's gray rock. it's very dense. it looks about as hard and dry as anything you can imagine. and yet inside the microscopic pores of this stuff -- and i'm not even talking about shale now, i'm talking about regular sandstone. the shale is even tougher and even tighter. inside there, unbelievably, there are these microscopic pores that happen to be filled with oil. and so there you are making this bet against nature spending, you
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know, you can spend -- the sky's the limit on what you have to spend to drill a well, particularly if you're drilling arctic offshore. and your going to wager this -- you're going to wager this? over half of the oil production from the united states, from the lower half -- from the lower 48 in the united states comes from mom and pop company, wildcatters, that are effectively taking that bet every day. and i must say the more i got into this, the more i thought, good lord, this is just amazing. but i've left the best part out. and here's where guilty love turns into passion. i'm going to talk about tight oil. because tight oil is the latest adventure in this amazing story. it begins, of course, back in the 1920s. this is what we all remember from, say, daniel yergin's book,
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"the prize," which is this marvelous history of the oil industry. we remember in the 1920s your classic wildcatter who then more or less without any knowledge and certainly no knowledge of the geology would drill wells here and there, scraping up money to do it and with no science and no knowledge. now fast forward a hundred years and where are we now? i have actually witnessed this myself sitting on a platform in the north sea. watching as a geologist or a drilling engineer sits in front of a computer screen and is watching a picture, a picture in full and living color which is being updated every few minutes that shows the structure that a drill bit is going through which the engineer is guiding as he
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goes. that drill bit is 5,000 feet down and is 10 miles away. and it's moving forward along a horizontal path going through a seam-oil-bearing rocks, to more than three or four meters thick. and because of that constant visualization, the constant data that are being sent back in real time from that drill bit as it moves forward, that engineer is guiding that drill bit and that column straight through the pay zone 5, 10 miles out. and it's getting astounding production. not only that, not only that, but every so often along the path of that horizontal well he's doing a frack job. so you've got what they call multistage fracks along this horizontal -- frack, frack,
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frack, frack. the result of all of that has been the most extraordinary surprise in the history of the oil industry and possibly in the economic history of the united states in this century. from being dependent on imported oil, we are now on the verge by 2020 of producing some five million barrels a day. five million barrels a day. that's half of saudi production from tight oil alone, and that oil does not exist except in those stones as recently as five years ago. that is amazing. lee, is that not a love story? [laughter] and, of course, where it gets extremely interesting is that the russians are watching. the russians are watching
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because there is no reason in principle why the same magic cannot be applied in russia, at least as far as the stones are concerned. the stones may be even more favorable in west siberia than they are in the lower 48 in the united states. there could be around the corner a renaissance of west siberia. mother nature could save vladimir putin yet. >> question: did the russians have any revenue exports of significance apart from oil and gas, or is this batesically it? >> the magic numbers are 53 and 12. 53 is the percentage of russian exports that come from oil. 1%2% of -- 12% of the russian exports come from gas which is worth keeping in perspective because we may be heading for a first class -- [inaudible] between the europeans and the russians over gas exports.
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and it's important to remember that the russians are far more dependent on oil exports than they are on gas. >> on average what percentage of the selling price does the russian government get? >> it gets across the board about 60%, but that's 60% of the gross revenues. if you look at the percentage of the profit at the margin that is taken by the russian government, it's above 95%. in other words, the oil companies get to keep very little. >> so it's like 95 percent marginal tax rate. >> that's right. it's one of the highest in the world. >> and that's one of the reasons the industry's kind of screwed up. >> absolutely. that's spot on. >> is there any temptation for the russians to solve their little problem here by simply sitting there and maybe even helping out oil prices going to $200 a barrel which might let them coast a little longer?
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>> they can't do it. they can't do it. the russians -- well, that's the short or answer. short answer. i'm a professor, after all. they can't do it because the way the world oil market works is the russians are what they call price takers. that is to say it's a huge bathtub, and whatever you dump in at one end of the bathtub goes into the common bathtub. thes ares would have to -- the russians would have to produce a whole lot more than they do today, which is about 12% of world production, number one. and they would have to have some tuneable capacity. what gives the saudis market power is that they have the reserve capacity to tune up or tune down. and they do influence oil prices. but the russians are not in a position to do that. and, indeed, they've never seriously tried. they have talked at various times of solidarity with
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producers. they send observe efforts to -- observers to opec meetings, but they've never joined, and they show no signs of joining. >> the oil industry's always been an industry that's very much involved in political oversight, let's put it that way. it seems to me that russia probably more so than other countries, even including venezuela. it seems to me that the impediment to the growth of the industry is the political system, political constraints in russia. and if they took in the technology that's available, they could rapidly accelerate the production of hydrocarbons. and that seems to be something that's an impediment to what could be a far more productive effort. as someone whose first job was with british petroleum, i'd be
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interested in answering that question as to why they don't get this thing really rolling. what was a case study with bp which seemed to be the situation where they cut off their face -- cut off their nose to display their face, and i'd be interested in what your insight to the bp story was. thank you. >> good questions. let's see, which one shall i take first? well, on the matter of politics, it's very easy to point the finger at the state. there's no question about it, and you'll see a chapter in the book, several chapters in the book that really flesh out that proposition. there's no question but that there is a serious problem in the relationship between the oil industry and the state, the main problem, of course, being the very high level of taxation. but it really is i guess the larger point i try to make in
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the book is that we're really talking about the effects of the soviet inheritance in the broadest senses of the world, including a certain cultural inheritance. there is a predisposition to control. that's the state's fixation that you might say is an inheritance, a classic russian inheritance. there's also a predisposition to resist the kind of market psychology that we take for granted in the united states. and let me give you an example of that. our view is that money today is worth more than money tomorrow, right? of course. interest rate is all about. except maybe in washington, i don't know. but elsewhere. if money today is worth more than pun tomorrow, then oil today is worth more than oil tomorrow. and, therefore, the right and virtuous thing to do if you are a rational market-oriented
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person is to produce the oil as fast as possible. even if that means that at the end of the day you get less total production from that field. it is the right and even virtuous thing to do to maximize the present value of the oil. that's the market approach. that is profoundly offensive to the classic russian oil man. who tends to think in terms of the total geological potential of the field and whose view of the right way to develop the field is to go in, develop it scientifically so at the end you get that last drop out. on the last day, you get the last drop. and i've had conversations with or very senior russian oil men in which they have -- their hands are shaking with
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indignation over what they view as the rape ask and pillage -- rape and pillage practices of western oil people. they call it -- [inaudible] and i've heard more than once russian oil men say you have to respect the oil. well, of course; that's something that a westerner would never say. so you see what i mean about profound differences in culture which frequently then take political expression. now, as for bp, and bp is very much at the center of this story in some respects. it's a bp story, because it's thanks to bp and john brown, the longtime ceo of bp, that i actually got into this business. and so at the beginning of the 1990s, i was with john brown flying in to russia as e sent the first teams -- as he sent the first teams of bp people to
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look over various possibilities. we went to maces like west sigh -- places like west siberia where a new democratic governor has taken over in 1991 and so on. so there were many add have beentures. which led directly under john brown, of course, we remember late period of bp which of john brown which was less happy. but in those days he was really the embodiment of the entrepreneur, truly. and his vision that russia was the place to be, but it happened if a way that he never imagined. -- in a way that he never imagined. it happened because through a combination of flukes and circumstances, he was able to gain for bp access to one with of the prime developed areas, one of what they call in the oil business brown field areas of russia. and in particular the one field
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that had been the prime field in soviet days. he was able to get an opportunity to get control in that field and that area and then apply western technology in conjunction with his partners, and the result was $19 billion in profits. but that was a unique opportunity. it was a fluke, it was a one- time breakthrough. and in a sense, irrelevant to the larger story and will never happen again. it was an extraordinary stroke of luck. maybe if there's one lesson to be had, it's you've got to be there, and you've got to be there, and when daylight opens in the line, you've got to be ready to go through. so in that sense they were ready to go through, and they did, and today scored. but that was a one-time opportunity. sir. >> i know this is a huge subject, but could you give us
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some sort of overview about yukos so that, put it in an american context so that we can understand it? as i read about them, i just couldn't figure out what was -- whose power play, what was the court's problem, what was stealing and why does all of a sudden he start opening gas stations all over new jersey? [laughter] >> you bring to mind that for years i've been filling my tank at a local gas stationing anything -- [inaudible] which happens to be a like oil station. -- luke oil station. it was one of the stations taken over by luke oil o. so i fill my tank, and then i say to the manager what's this i hear about your working for the russ keys?
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[laughter] he's also very shocked. of course, he knows me by now, so we go through a little dance. um, well, one is a luke oil story which is a very different story because luke oil is a genuinely private company that emerged out of the ruins of the soviet union run by a entrepreneur who is, in fact, not russianing but azerbaijani who started his career in the -- [inaudible] when he was a young man, he was working on a platform. there was an explosion, and he got blown into the sea in his early 20s. he struck out for west siberia and tried, decided to make his fortune there. and he rose. and he rose, and he was extremely successful, and he became deputy minister of the soviet oil industry, but when everything started to fall apart, he thought, ha, this is my chance.
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this is my opportunity. and recreated the first private oil company. so that's luke oil, and it's quite a story. i'm sorry, i lost the track of -- >> [inaudible] >> yes, indeed. he was a different story because alec was an oilman. and in that respect he's respected, he is respected by his colleagues in the oil industry one of his liabilities within the industry itself is that he was regarded as an upstart. theyhe was a man who came in ase of the people who made phenomenal forchubs in the -- fortunes at the tail end of the gorbachev period and the first years under yeltsin in finance. that is trading, buying and selling computers, building up from there, developing a bank. he had a bank and so on.
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so he was a go-go financier. among the assets that he picked up at that time was an oil company which was losing money and was not particularly attractive property. but then came the asian flu of 1998, and the crash of the russian economy at that time. and suddenly he was out of the banking business. the bank went broke. and so he was in the oil business, and so he made a go of the oil business. what followed was absolutely remarkable, but the point is he was free about all these hang-ups about how you've got to respect the oil. he was, in fact, very western. that was his creed, and that's how he went after it, and he brought in westerners to help him do that and doubled oil production.
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but the problem is that he was a rebel on every front, and in particular he defied the president which was a very unwise thing to do. and so he ended up in a confrontation, in a blood match with vladimir putin whom he regarded with contempt. he consistently underestimated putin. and i'll give you a little episode that became famous as the symbolic turning point of which knowledgeable people in moscow as soon as they heard of this episode realized that he was -- well, if not doomed, he was going to lose. of in february of 2003, so this is eight months before his arrest, putin summoned the oligarchs; that is to say the rich billionaires from russia, the private sector billionaires, as he did from time to time.
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and so there they all are in the kremlin like obedient school children, and putin has the center table, and this man shows up with a powerpoint presentation on corruption in russia. [laughter] and he gets up, and he says, mr. president, the most serious problem in the russian economy today is corruption. and at the center, the epicenter of that corruption is the russian government, mr. president. and, in fact, it's the ministry of energy. the minister of energy's sitting right there. and it's also the russian national oil company, the head of which was sitting right there. and he goes on to talk about all of the ways in which these guys are finish. [inaudible] at which point putin interrupted. he's been sitting there calmly,
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and in a calm tone of voice, he says i understand that you have a great many reserves that you are not developing, and i understand that you, too, are having some problems with paying taxes. and he goes on to list in a very quiet voice things that amount to saying that the man is maybe himself the center of the corruption problem. and then a very thin smile -- there are videos of this confrontation -- a very thin smile, and so putin says, you see, i'm returning the hockey puck to you. [laughter] and there was this laughter, nervous laughter in the room. you can hear it on the tapes. and everybody knew in moscow that by the next day that he was finished. so that really is what it comes down to, he defied the man.
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and so long as the man is there, it's hard to imagine -- [inaudible] we're hearing now vibrations to the effect that maybe they'll let him out early. >> professor, thank you for your passionate and succinct presentation of the russian oil industry. i was just wondering if you would talk a little bit about the environment and environmental issues. here in this country whenever we talk about new exploration, we're also talking about environmental implications, and we hear about disasters here. we don't really hear much about them in russian -- russia, though i'm sure they exist and can be quite massive. so i wondered if you'd just talk about that a bit. >> well, here we come to the guilty part of the guilty love. because i'm as conscious as everyone else that we are, in a sense, too clever for our own good. by the way, one of the
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unfortunate consequences of this bonanza that we are, that we have just, that we are now harvesting is that we are headed in all likelihood for an era of quite possibly cheaper hydrocarbons, and certainly very abundant hydrocarbons. that thing which is so easy for us which is to climb this our car and head to the nearest gas station is something that's going to get easier and easier and easier for the next generation. and this is very bad news for the environment, there's no question about that. forchew facilitately, in -- fortunately, in russia they do not have an environment. [laughter] and certainly the oil industry has never been particularly
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concerned about the environment. in fact, i remember the early 1990s talking to the minister of environment, an environmental scientist. he happened to be or very briefly, also, the minister of geology, so i met him in this huge office where there were maps that showed radioactive contamination of the st. petersburg area. so it was quite an interesting office of to sit in. and i asked him about the environment. he said we don't have an environment. we can't afford one. and that was very much the story of the 1990s. the signature of the russian hydrocarbon industry is absolutely conventional up to this point, and their investment level in investment in renewables and unconventionals is at this point effectively minimal with one big exception, and that's nuclear power, if you consider that to be a virtuous renewable.
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as for solar, well, the agency that is in charge is, in fact, subordinated to the nuclear power agency which tells you something. and so on. so this is a story that has not yet begun. it's something that the russians are going to have to become more conscious of if only for one very direct reason. the entire northern third of russia is perma frost, and the perm frost is melting. and the consequences of a massive melting of perm a frost are particularly serious in russia. the economic disruption alone, never mind the environmental consequences. so we're talking about big downsides to this guilty love story.
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>> one last question? >> thank you very much. to what extent is or was -- [inaudible] part of the corruption problem in russia, and could you say something about the actual and potential impact of russia's ascension to the world trade organization, and it's bet getting what used to be called most-favored nation trade status? >> well, those are two very different questions, of course. i don't claim to be an expert on the world trade organization. there is a man in the washington area named keith bush who is well known to anybody who has worked on russian affairs these many years who is the world's living expert on russia and the world trade organization. he works for the u.s./russia business council. so i refer you to him.
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but i think it's a fair prediction that the russians are going to, are going to defend their domestic industries every step of the way. i think the doctrines of free trade, the doctrines of globalization are not the doctrines that come first to the russians' minds. let's put it that way. and so we shall see. if china is considered a successful member of the wto, why surely russia will be as well. >> and on -- >> on fed around cough sky. i think the fascinating thing is the he had resisted temptation to consider him an angel, a
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matter or a criminal -- martyr or a criminal. he was a man who emerged in a revolutionary time. he was a student at the time the soviet union fell apart. just graduating with a chemical engineering degree. he was an political organizer, he had that energy, that entrepreneurial energy. there are pictures of him in high school, and he's just growing his first moustache, then he became famous for that afterrish moustache he had on the public scene. but there he is, he's superconfident, and he knows he's going to run the world. when you ask what he wants to be, he's going to be a soviet factory director. this is a guy who's on his way. well, those qualities, those animal qualities are the qualities of american
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capitalists. but soviet style so that plus the fact that he was too young to have experienced really the soviet system and to have grown that protective cover of dissimulation, that made him an object of fear and hatred by people in the oil industry, and then it made him an object of greed by people within the chem lin who looked -- kremlin who looked at him and sized him up as the perfect victim. this was a man who was so provocative in his behavior that all you had to do was lure him forward, and you could count on it. his behavior would become more and more provocative until finally he robbed himself of support within the oil industry, within the establishment. by the time he was arrested, he
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had only -- the only friends he had left were in the united states. it was, i think, a fascinating tale of destruction, of organized destruction and self-destruction. and it's an absolutely fascinating case. >> well, thank you, that was fascinating. [applause] >> visit booktv.org to watch any of the programs you see here online. type the author or book title in the search bar on the upper left side of the page and click search. you can also share anything you see on booktv.org easily by clicking share on the upper left side of the page and selecting the format. booktv streams live online for 48 hours every weekend with top nonfiction books and authors. booktv.org. >> here's a look at some books or that are being published this
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week. sonia sotomayor recounts her journey from her childhood to her appointment as the first hispanic woman to sit on the supreme court in "my beloved world." in "the freedom answer book," judge andrew napolitano argues the government is jeopardizing people's rights and presents his thoughts on how they can be protected. former democratic congressman tom allen writes about the legislative deadlocks and partisanship in congress in "dangerous convictions: what's really wrong with the u.s. congress." in "good prose, the art of nonfiction," pulitzer prize-winning author tracy kidder and richard todd recount their working relationship and offer advice on writing essays, narratives and memoirs. nick terse, managing editor for tom dispatch.com, reports on war crimes in the vietnam war in "kill anything that moves.
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the real american war in seat yam." look for these titles in the coming week and watch for these authors on booktv and on booktv.org. >> we're here with author and journalist fergus bordewich. >> most people have only the vaguest recollection from perhaps junior high school school say there was a crisis in 1850. the country went to the brink of civil war, most of the political culture and most americans thought war was going to take place, that the deep south was going to succeed, secede, and they were much closer to access session than most -- secession than most americans today even realize. certainly the deep south states. texas was arming, other southern states were is sending armed men to texas. why am i talking about texas?
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had there been a collision, had were begun in -- had war begun in 18 50rbgs it wouldn't have become in charleston, it would have begun in santa fe, new mexico. why? because texas with it own imperial ambitions to move westward supported by the slave-holding south seeking to invade new mexico territory. there were many, many other parts to the crisis. fundamentally, whether or not the west would be slave or free n. 1850 the south was militarized, southern nationalism was at a peak. jefferson davis on the floor of the nat in 1850 -- on the floor of the senate in 1850 said if a southern confederacy was to be formed now, he was ready to accept the presidency of it in 1850. the north, on the other hand, was nowhere near ready to go to war and, indeed, the north still dominated by the conservative wing of the democratic party allied largely with the south.
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in other words, the north would not have fought the war or it certainly wouldn't have fought the same war, secession would probably have succeeded, and the consequence to that not only for american history, but for the rest of the world could have been quite tragic. >> what was the floor of congress like in 1850? >> it was tumultuous, chaotic, intense. the, a debate in congress was like the world series today. of course, there was no sports culture in the mid 19th century. politics was the great american sport. americans came from all over the country to attend debates and especially when great titans like henry clay and daniel webster and john cm calhoun and others -- c. calhoun and others were debating. but imagine a much smaller
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senate chamber crowded with men who might have hated each other literally elbow to elbow at their small desks, a room reeking of cigar smoke, smelling of gas from gas lamps, carpets with spitoons scattered here and there meant spitting in -- men spitting in one direction or another, often missing. and a tense and intense, congested atmosphere with political men going mano a mano in the great glad tore y'all arena of 19th century america. >> two of those men, henry clay and stephen douglas, what was their role in the compromise 134. >> well, henry clay was called out of retirement in kentucky to take charge of an attempt to create some kind of a congresswoman propoise. -- compromise. he was known as the great
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compromiser for husbanding the compromise of 1820, the missouri compromise, and also the 1833 compromise that walked the country back again from crisis over south carolina's nullification of federal law. henry clay was a grand, remarkable man and never one to say no when he was invited to be the center of political attention. so he returned to washington and led the debate for seven months straight attempting to persuade congressmen from the right and left, from the south, from the north to agree to a grand compromise, a grand bargain, if you like, that would solve the slavery question once and for all. he failed. henry clay was pivotal to the debate, but he failed in actually making a compromise real. he had put together one of the first omnibus bills in american
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political history. the omnibus collapsed. what happened? stephen a. douglas, known to journalists at the time as a steam engine in britches, very horse, ferocious northern democrat, youngest man in the senate -- 35 years old, the marco rubio of his day, perhaps -- did what clay had not done. he did the numbers. in other words, what stephen a. douglas determined was that there were enough combinations of votes in the senate to pass the different parts of clay's compromise, but not all at once. so he passed six separate bills using different combinations. so the lesson is really persuasion is necessary, and it's imperative to sway the doubtful. but if you don't do the numbers, you won't succeed. persuade y